Navigation Links
New Report: Drugstore Networks Could Save Employers, Medicare, and Medicaid $115 Billion
Date:1/28/2013

WASHINGTON, Jan. 28, 2013 /PRNewswire-USNewswire/ -- As Medicare, Medicaid, and commercial health plans explore new ways to reduce costs, a new study finds that the extraordinary number of pharmacies in the United States offers an opportunity to save $115 billion over the next decade through the greater use of preferred and limited pharmacy networks.  The study from Visante finds that preferred and limited pharmacy networks can reduce costs while meeting the national access standards of the popular Medicare Part D program, the Pharmaceutical Care Management Association (PCMA) said today. 

Today, most plans use "open networks," where all participating drugstores offer basic discounts and consumers pay copays instead of the cash price.  Far fewer plans use preferred networks (where the drugstores that offer the best discounts are "preferred" over other network pharmacies) and even fewer plans use "limited networks" (which include only the drugstores with the best discounts).

"Since the U.S. now has more pharmacies than McDonald's, Burger Kings, Pizza Huts, Wendy's, Taco Bells, Kentucky Fried Chickens, Domino's Pizzas, and Dunkin' Donuts combined, greater use of drugstore networks can save billions without undermining patient access," said PCMA President and CEO Mark Merritt .  "For public programs, it's far better to reduce health costs by encouraging drugstores to compete than to randomly slash enrollee benefits or provider payments."

Click here to read the study.

Major findings include:

  • Greater use of preferred and limited pharmacy networks generates savings. Greater use of preferred and limited pharmacy networks could save payers an additional $115 billion over the next ten years and achieve the savings estimated below while meeting Medicare's pharmacy access standards.
    • Medicaid: $26 billion
    • Medicare savings: $35 billion
    • Commercial sector savings: $54 billion
    • Total savings: $115 billion
  • Pharmacies as common as fast food restaurants. Today, there are more drugstores in the U.S. than McDonald's, Burger Kings, Pizza Huts, Wendy's, Taco Bells, Kentucky Fried Chickens, Domino's Pizzas, and Dunkin' Donuts combined, creating a highly competitive environment.

Three types of retail pharmacy networks include:

  • Open Pharmacy Network.  Plans create a broad network open to virtually all drugstores that agree to offer basic discounts to the plans. A plan's enrollees can use their prescription drug benefits at all network pharmacies for the same copay/cost share.  This is currently the most widely used type of retail pharmacy network.
  • Preferred Pharmacy Network.  Plans create a select group of preferred pharmacies within a broader network of non-preferred drugstores.  Preferred pharmacies offer plans better discounts than the non-preferred drugstores, and plans, in turn, lower copays/cost sharing for enrollees who choose them.  Use of preferred networks is growing and can lower prescription costs by an estimated 5%, compared to open networks, while meeting Medicare's pharmacy access standards nationally.
  • Limited Pharmacy Network. Plans create a network limited to drugstores that offer deep discounts.  Plan enrollees have the same copay at all pharmacies in the network.  Compared to open networks, limited networks can lower costs by up to 10% or more.

Despite the growth and popularity of pharmacy networks, some public policies undermine their use in Medicaid, Medicare, and the commercial sector.

  • "Any Willing Pharmacy" policies.  These are laws and regulations that force plans to contract with pharmacies that don't meet their quality standards or geographic access needs. According to the Federal Trade Commission, such policies discourage competition and limit access to affordable healthcare.
  • Drugstore payments in Medicaid set by political officials, not market forces.  State government officials set pharmacy reimbursement rates for Medicaid that are often higher than those negotiated by health plans in Medicare and the commercial market. When plans are not allowed to negotiate, drugstores have less incentive to offer discounts in exchange for being included in networks.
  • Litigation by independent drugstores.  Independent drugstores have launched a wave of lawsuits aimed at hobbling the ability of Medicaid and Medicare to implement preferred and limited pharmacy networks.

PCMA represents the nation's pharmacy benefit managers (PBMs), which improve affordability and quality of care through the use of electronic prescribing (e-prescribing), generic alternatives, mail-service pharmacies, and other innovative tools for 215 million Americans.

Follow PCMA on Twitter


'/>"/>
SOURCE Pharmaceutical Care Management Association
Copyright©2012 PR Newswire.
All rights reserved

Related medicine technology :

1. Pharma IQs Laboratory Informatics Report: Current Trends & Predictions for 2015
2. Report: Independent Drugstores, Policymakers Face New Challenges
3. Home Affairs Committees Drugs Report: Angelus Foundation Says the Prime Minister Should Not Have Rejected a Royal Commission
4. China Nepstar Chain Drugstore Reports Second Quarter 2012 Financial Results
5. China Nepstar Chain Drugstore to Report Third Quarter 2012 Financial Results on November 28, 2012
6. Drugstore Lobby Poll of Seniors: Mail-Service Pharmacies Cost Less than Community Drugstores
7. One Of Colorados Largest Physician Networks Signs Agreement To Join Colorado Health Information Exchange
8. Skin Integrity Products (SIP): Effective Distribution Networks Are Key to Penetrating Western European Market, Says Frost & Sullivan
9. Hearing Loss Could Lead to Multiple Chronic Diseases for Millions of Brits
10. HIV Immunity Study Could Pave Way for Vaccine Development
11. Back to School Ideas: Vaccines for Kids Could Hurt Rather Than Help Fight Disease
Post Your Comments:
*Name:
*Comment:
*Email:
(Date:6/24/2016)... Calif. , June 24, 2016  American Respiratory Labs (ARL), ... is now able to perform sophisticated lung assessments in patients, homes, ... , Inc. Patients are no longer limited to ... EasyOne PRO ® , ARL patients like Jeanne R. of ... in the comfort of her own home. ...
(Date:6/24/2016)... PUNE, India , June 24, 2016 ... "Pen Needles Market by Type (Standard Pen Needles, Safety ... 12mm), Therapy (Insulin, GLP-1, Growth Hormone), Mode of Purchase ... published by MarketsandMarkets, This report studies the market for ... is expected to reach USD 2.81 Billion by 2021 ...
(Date:6/24/2016)... , Belgium , June ... MKT: VNRX), today announced the appointment of Dr. ... of Directors as a Non-Executive Director, effective June ... Company,s Audit, Compensation and Nominations and Governance Committees.  ... Dr. Futcher will provide independent expertise and strategic ...
Breaking Medicine Technology:
(Date:6/24/2016)... ... June 24, 2016 , ... Those who have experienced ... feelings, many turn to unhealthy avenues, such as drug or alcohol abuse, as a ... has released tools for healthy coping following a traumatic event. , Trauma sufferers tend ...
(Date:6/24/2016)... ... ... Marcy was in a crisis. Her son James, eight, was out of control. Prone to ... , “When something upset him, he couldn’t control his emotions,” remembers Marcy. “If there ... my other children and say he was going to kill them. If we were ...
(Date:6/24/2016)... ... June 24, 2016 , ... Global law firm Greenberg Traurig, P.A. announced ... attorneys chosen by their peers for this recognition are considered among the top 2 ... received special honors as members of this year’s Legal Elite Hall of Fame: ...
(Date:6/24/2016)... CA (PRWEB) , ... June 24, 2016 , ... Comfort ... the American Cancer Society and the Road To Recovery® program to drive cancer patients ... seniors and other adults to ensure the highest quality of life and ongoing independence. ...
(Date:6/24/2016)... Plano, TX (PRWEB) , ... June 24, 2016 , ... ... taking part in Genome magazine’s Code Talker Award, an essay contest in which patients ... for an award to be presented at the 2016 National Society of Genetic Counselors ...
Breaking Medicine News(10 mins):